Accounting Innovation: Trullion Integrates AI-Powered IBR Calculator For Accelerated ASC 842 Adoption

In an exciting move, Trullion announced the integration of Alvarez & Marsal’s automated incremental borrowing rate estimator LeaseSCRE into Trullion’s lease accounting solution. 

This new capability provides accounting and finance professionals – including auditors and consultants – with a quick answer to one of the thorniest challenges inherent in new accounting standards, and offers a unique end-to-end solution for users of Trullion’s automated AI-enhanced accounting software. 

A winning collaboration

Trullion prides itself on having created an AI-powered accounting platform that automates challenging compliance workflows such as Lease Accounting and Revenue Recognition, and connects corporate Controllers, CFOs, consultants and external auditors in one platform. 

With ASC 842 being a major new accounting standard that companies now have to comply with, companies have had to take a deeper look at how they account for their leases. The standard spells out this accounting treatment, which hinges on one critical calculation: the incremental borrowing rate, or IBR. 

Isaac Heller, CEO at Trullion, emphasizes this, noting “The integration with LeaseSCRE provides an automated option for one of the most difficult aspects of adopting ASC 842: determining your IBR rate.”

This rate touches all aspects of ASC 842, crucially including the new lease assets and liabilities that are now a mandatory part of the balance sheet.

Calculating this figure can be complex and time consuming, often consisting of manual work that can take days and even weeks; what’s more, if it is incorrectly calculated, the impact can be drastic. This is also where the interests of companies, consultants, and auditors are aligned. 

A market-leading product

The automated IBR estimator LeaseSCRE – which the Alvarez & Marsal valuation team developed using advanced machine-learning algorithms – enables accounting teams to generate an IBR in just moments. 

Behind the scenes, the algorithm leverages the company’s financial data as well as industry information and other external data to accurately predict credit ratings and return an IBR for the company. 

As Chandu Chilakapati, Managing Director of Alvarez & Marsal’s Valuation practice puts it, “Companies have deployed significant resources to classify and organize their lease portfolios. Despite all the resources spent on the accounting, companies still require the incremental borrowing rate to determine the present value of lease liabilities. LeaseSCRE generates an estimated credit rating using a machine learning based model that processes basic company and sector financial data and returns a rating-based IBR curve.” 

This integration will have a massive impact on how companies relate to their lease accounting obligations. Continues Chilakapati: “Now with an integration into Trullion’s lease accounting module, financial leaders can experience their ongoing ASC 842 compliance process with a new level of efficiency”.

For Trullion, partnering with Alvarez & Marsal was a natural step. The organization has ​​over three decades of experience, more than 6,000 employees, 65 offices in 5 continents, and like Trullion, believes in leading with best practices and leveraging technology to solve tough business challenges. 

Making Trullion’s vision a reality

This new integration fits perfectly with Trullion’s vision to become a single source of truth for accounting teams, and to usher in a future where modern financial tools can operate as an open ecosystem where software and service providers can provide end-to-end automation for CFOs and other stakeholders. 

In an industry that has been slow to embrace change, Trullion is leading the way with the technological tools of tomorrow, making life easier and more efficient for financial users today.

Check out our recent webinar with Alvarez & Marsal in which we provide more information on the integration or contact us to learn more.

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